§ 1.994   Routine terms and conditions.

   Foreign  ownership rulings issued pursuant to § § 1.990 et seq. shall be
   subject to the following terms and conditions, except as otherwise specified
   in a particular ruling:

   (a)(1)  Aggregate  allowance for rulings issued under § 1.990(a)(1). In
   addition to the foreign ownership interests approved specifically in a
   licensee's  declaratory  ruling  issued  pursuant to § 1.990(a)(1), the
   controlling U.S.-organized parent named in the ruling (or a U.S.-organized
   successor-in-interest formed as part of a pro forma reorganization) may be
   100 percent owned, directly and/or indirectly through one or more U.S- or
   foreign-organized entities, on a going-forward basis (i.e., after issuance
   of the ruling) by other foreign investors without prior Commission approval.
   This “100 percent aggregate allowance” is subject to the requirement that
   the  licensee  seek  and obtain Commission approval before any foreign
   individual, entity, or “group” not previously approved acquires, directly
   and/or indirectly, more than five percent of the U.S. parent's outstanding
   capital stock (equity) and/or voting stock, or a controlling interest, with
   the exception of any foreign individual, entity, or “group” that acquires an
   equity and/or voting interest of ten percent or less, provided that the
   interest is exempt under § 1.991(i)(3).

   (2) Aggregate allowance for rulings issued under § 1.990(a)(2). In addition
   to the foreign ownership interests approved specifically in a licensee's
   declaratory ruling issued pursuant to § 1.990(a)(2), the licensee(s) named in
   the ruling (or a U.S.-organized successor-in-interest formed as part of a
   pro forma reorganization) may be 100 percent owned on a going forward basis
   (i.e., after issuance of the ruling) by other foreign investors holding
   interests in the licensee indirectly through U.S.-organized entities that do
   not control the licensee, without prior Commission approval. This “100
   percent aggregate allowance” is subject to the requirement that the licensee
   seek and obtain Commission approval before any foreign individual, entity,
   or “group” not previously approved acquires directly and/or indirectly,
   through  one  or  more U.S.-organized entities that do not control the
   licensee, more than five percent of the licensee's outstanding capital stock
   (equity) and/or voting stock, with the exception of any foreign individual,
   entity, or “group” that acquires an equity and/or voting interest of ten
   percent or less, provided that the interest is exempt under § 1.991(i)(3).
   Foreign  ownership  interests held directly in a licensee shall not be
   permitted to exceed an aggregate 20 percent of the licensee's equity and/or
   voting interests.

   Note to paragraph (a): Licensees have an obligation to monitor and stay
   ahead of changes in foreign ownership of their controlling U.S.-organized
   parent companies (for rulings issued pursuant to § 1.990(a)(1)) and/or in the
   licensee itself (for rulings issued pursuant to § 1.990(a)(2)), to ensure
   that the licensee obtains Commission approval before a change in foreign
   ownership  renders  the  licensee out of compliance with the terms and
   conditions  of  its  declaratory  ruling(s) or the Commission's rules.
   Licensees, their controlling parent companies, and other entities in the
   licensee's vertical ownership chain may need to place restrictions in their
   bylaws or other organizational documents to enable the licensee to ensure
   compliance with the terms and conditions of its declaratory ruling(s) and
   the Commission's rules.
   Example 1 (for rulings issued under § 1.990(a)(1)). U.S. Corp. files an
   application for a common carrier license. U.S. Corp. is wholly owned and
   controlled by U.S. Parent, which is a newly formed, privately held Delaware
   corporation in which no single shareholder has de jure or de facto control.
   A shareholders' agreement provides that a five-member board of directors
   shall govern the affairs of the company; five named shareholders shall be
   entitled to one seat and one vote on the board; and all decisions of the
   board shall be determined by majority vote. The five named shareholders and
   their respective equity interests are as follows: Foreign Entity A, which is
   wholly owned and controlled by a foreign citizen (5 percent); Foreign Entity
   B, which is wholly owned and controlled by a foreign citizen (10 percent);
   Foreign Entity C, a foreign public company with no controlling shareholder
   (20 percent); Foreign Entity D, a foreign pension fund that is controlled by
   a foreign citizen and in which no individual or entity has a pecuniary
   interest exceeding one percent (21 percent); and U.S. Entity E, a U.S.
   public company with no controlling shareholder (25 percent). The remaining
   19 percent of U.S. Parent's shares are held by three foreign-organized
   entities as follows: F (4 percent), G (6 percent), and H (9 percent). Under
   the shareholders' agreement, voting rights of F, G, and H are limited to the
   minority  shareholder protections listed in § 1.991(i)(5). Further, the
   agreement expressly prohibits G and H from becoming actively involved in the
   management or operation of U.S. Parent and U.S. Corp.

   As required by the rules, U.S. Corp. files a section 310(b)(4) petition
   concurrently with its application. The petition identifies and requests
   specific approval for the ownership interests held in U.S. Parent by Foreign
   Entity A and its sole shareholder (5 percent equity and 20 percent voting
   interest); Foreign Entity B and its sole shareholder (10 percent equity and
   20 percent voting interest), Foreign Entity C (20 percent equity and 20
   percent voting interest), and Foreign Entity D (21 percent equity and 20
   percent voting interest) and its fund manager (20 percent voting interest).
   The Commission's ruling specifically approves these foreign interests. The
   ruling also provides that, on a going-forward basis, U.S. Parent may be 100
   percent owned in the aggregate, directly and/or indirectly, by other foreign
   investors,  subject to the requirement that U.S. Corp. seek and obtain
   Commission  approval before any previously unapproved foreign investor
   acquires  more than five percent of U.S. Parent's equity and/or voting
   interests, or a controlling interest, with the exception of any foreign
   investor that acquires an equity and/or voting interest of ten percent or
   less, provided that the interest is exempt under § 1.991(i)(3).

   In  this case, foreign entities F, G, and H would each be considered a
   previously  unapproved  foreign  investor  (along with any new foreign
   investors). However, prior approval for F, G and H would only apply to an
   increase  of  F's interest above five percent (because the ten percent
   exemption under § 1.991(i)(3) does not apply to F) or to an increase of G's
   or H's interest above ten percent (because G and H do qualify for this
   exemption). U.S. Corp. would also need Commission approval before Foreign
   Entity D appoints a new fund manager that is a non-U.S. citizen and before
   Foreign Entities A, B, C, or D increase their respective equity and/or
   voting interests in U.S. Parent, unless the petition previously sought and
   obtained Commission approval for such increases (up to non-controlling 49.99
   percent interests). (See § 1.991(k)(2).) Foreign shareholders of Foreign
   Entity C and U.S. Entity E would also be considered previously unapproved
   foreign investors. Thus, Commission approval would be required before any
   foreign shareholder of Foreign Entity C or U.S. Entity E acquires (1) a
   controlling interest in either company; or (2) a non-controlling equity
   and/or  voting interest in either company that, when multiplied by the
   company's equity and/or voting interests in U.S. Parent, would exceed 5
   percent of U.S. Parent's equity and/or voting interests, unless the interest
   is exempt under § 1.991(i)(3).
   Example 2 (for rulings issued under § 1.990(a)(2)). Assume that the following
   three  U.S.-organized  entities hold non-controlling equity and voting
   interests in common carrier Licensee, which is a privately held corporation
   organized in Delaware: U.S. corporation A (30 percent); U.S. corporation B
   (30 percent); and U.S. corporation C (40 percent). Licensee's shareholders
   are wholly owned by foreign individuals X, Y, and Z, respectively. Licensee
   has received a declaratory ruling under § 1.990(a)(2) specifically approving
   the 30 percent foreign ownership interests held in Licensee by each of X and
   Y (through U.S. corporation A and U.S. corporation B, respectively) and the
   40 percent foreign ownership interest held in Licensee by Z (through U.S.
   corporation C). On a going-forward basis, Licensee may be 100 percent owned
   in the aggregate by X, Y, Z, and other foreign investors holding interests
   in Licensee indirectly, through U.S.-organized entities that do not control
   Licensee,  subject  to the requirement that Licensee obtain Commission
   approval before any previously unapproved foreign investor acquires more
   than five percent of Licensee's equity and/or voting interests, with the
   exception of any foreign investor that acquires an equity and/or voting
   interest of ten percent or less, provided that the interest is exempt under
   § 1.991(i)(3). In this case, any foreign investor other than X, Y, and Z
   would be considered a previously unapproved foreign investor. Licensee would
   also need Commission approval before X, Y, or Z increases its equity and/or
   voting interests in Licensee unless the petition previously sought and
   obtained Commission approval for such increases (up to non-controlling 49.99
   percent interests). (See § 1.991(k)(2).)

   (b) Subsidiaries and affiliates. A foreign ownership ruling issued to a
   licensee shall cover it and any U.S.-organized subsidiary or affiliate, as
   defined in § 1.990(d), whether the subsidiary or affiliate existed at the
   time the ruling was issued or was formed or acquired subsequently, provided
   that the foreign ownership of the licensee named in the ruling, and of the
   subsidiary  and/or affiliate, remains in compliance with the terms and
   conditions of the licensee's ruling and the Commission's rules.

   (1) The subsidiary or affiliate of a licensee named in a foreign ownership
   ruling issued under § 1.990(a)(1) may rely on that ruling for purposes of
   filing its own application for an initial common carrier or aeronautical
   license or spectrum leasing arrangement, or an application to acquire such
   license or spectrum leasing arrangement by assignment or transfer of control
   provided that the subsidiary or affiliate, and the licensee named in the
   ruling, each certifies in the application that its foreign ownership is in
   compliance with the terms and conditions of the foreign ownership ruling and
   the Commission's rules.

   (2) The subsidiary or affiliate of a licensee named in a foreign ownership
   ruling issued under § 1.990(a)(2) may rely on that ruling for purposes of
   filing its own application for an initial common carrier radio station
   license or spectrum leasing arrangement, or an application to acquire such
   license or spectrum leasing arrangement by assignment or transfer of control
   provided that the subsidiary or affiliate, and the licensee named in the
   ruling, each certifies in the application that its foreign ownership is in
   compliance with the terms and conditions of the foreign ownership ruling and
   the Commission's rules.

   (3) The certifications required by paragraphs (b)(1) and (b)(2) of this
   section shall also include the citation(s) of the relevant ruling(s) (i.e.,
   the DA or FCC Number, FCC Record citation when available, and release date).

   (c) Insertion of new controlling foreign-organized companies. (1) Where a
   licensee's foreign ownership ruling specifically authorizes a named, foreign
   investor  to hold a controlling interest in the licensee's controlling
   U.S.-organized parent, for rulings issued under § 1.990(a)(1), or in an
   intervening U.S.-organized entity that does not control the licensee, for
   rulings issued under § 1.990(a)(2), the ruling shall permit the insertion of
   new, controlling foreign-organized companies in the vertical ownership chain
   above the controlling U.S. parent, for rulings issued under § 1.990(a)(1), or
   above  an  intervening U.S.-organized entity that does not control the
   licensee, for rulings issued under § 1.990(a)(2), without prior Commission
   approval provided that any new foreign-organized company(ies) are under 100
   percent common ownership and control with the foreign investor approved in
   the ruling.

   (2) Where a previously unapproved foreign-organized entity is inserted into
   the  vertical  ownership  chain  of  a  licensee,  or  its controlling
   U.S.-organized  parent,  without prior Commission approval pursuant to
   paragraph (c)(1) of this section, the licensee shall file a letter to the
   attention of the Chief, International Bureau, within 30 days after the
   insertion of the new, foreign-organized entity. The letter must include the
   name  of  the new, foreign-organized entity and a certification by the
   licensee that the entity complies with the 100 percent common ownership and
   control requirement in paragraph (c)(1) of this section. The letter must
   also reference the licensee's foreign ownership ruling(s) by IBFS File No.
   and FCC Record citation, if available. This letter notification need not be
   filed  if  the  ownership change is instead the subject of a pro forma
   application or pro forma notification already filed with the Commission
   pursuant to the relevant wireless radio service rules or satellite radio
   service rules applicable to the licensee.

   (3) Nothing in this section is intended to affect any requirements for prior
   approval under 47 U.S.C. 310(d) or conditions for forbearance from the
   requirements of 47 U.S.C. 310(d) pursuant to 47 U.S.C. 160.

   Example (for rulings issued under § 1.990(a)(1)). Licensee receives a foreign
   ownership  ruling  under § 1.990(a)(1) that authorizes its controlling,
   U.S.-organized parent (“U.S. Parent A”) to be wholly owned and controlled by
   a foreign-organized company (“Foreign Company”). Foreign Company is minority
   owned (20 percent) by U.S.-organized Corporation B, with the remaining 80
   percent controlling interest held by Foreign Citizen C. After issuance of
   the  ruling,  Foreign  Company forms a wholly-owned, foreign-organized
   subsidiary (“Foreign Subsidiary”) to hold all of Foreign Company's shares in
   U.S. Parent A. There are no other changes in the direct or indirect foreign
   ownership of U.S. Parent A. The insertion of Foreign Subsidiary into the
   vertical ownership chain between Foreign Company and U.S. Parent A would not
   require  prior  Commission approval, except for any approval otherwise
   required pursuant to section 310(d) of the Communications Act and not exempt
   therefrom as a pro forma transfer of control under § 1.948(c)(1).

   Example (for rulings issued under § 1.990(a)(2)). An applicant for a common
   carrier license receives a foreign ownership ruling under § 1.990(a)(2) that
   authorizes  a  foreign-organized company (“Foreign Company”) to hold a
   non-controlling 44 percent equity and voting interest in the applicant
   through Foreign Company's wholly-owned, U.S.-organized subsidiary, U.S.
   Corporation A, which holds the non-controlling 44 percent interest directly
   in the applicant. The remaining 56 percent of the applicant's equity and
   voting interests are held by its controlling U.S.-organized parent, which
   has no foreign ownership. After issuance of the ruling, Foreign Company
   forms a wholly-owned, foreign-organized subsidiary to hold all of Foreign
   Company's shares in U.S. Corporation A. There are no other changes in the
   direct or indirect foreign ownership of U.S. Corporation A. The insertion of
   the foreign-organized subsidiary into the vertical ownership chain between
   Foreign Company and U.S. Corporation A would not require prior Commission
   approval.

   (d) Insertion of new non-controlling foreign-organized companies. (1) Where
   a licensee's foreign ownership ruling specifically authorizes a named,
   foreign  investor to hold a non-controlling interest in the licensee's
   controlling U.S.-organized parent, for rulings issued under § 1.990(a)(1), or
   in an intervening U.S.-organized entity that does not control the licensee,
   for rulings issued under § 1.990(a)(2), the ruling shall permit the insertion
   of new, foreign-organized companies in the vertical ownership chain above
   the controlling U.S. parent, for rulings issued under § 1.990(a)(1), or above
   an intervening U.S.-organized entity that does not control the licensee, for
   rulings  issued  under § 1.990(a)(2), without prior Commission approval
   provided that any new foreign-organized company(ies) are under 100 percent
   common ownership and control with the foreign investor approved in the
   ruling.

   Note to paragraph (d)(1): Where a licensee has received a foreign ownership
   ruling under § 1.990(a)(2) and the ruling specifically authorizes a named,
   foreign investor to hold a non-controlling interest directly in the licensee
   (subject to the 20 percent aggregate limit on direct foreign investment),
   the ruling shall permit the insertion of new, foreign-organized companies in
   the vertical ownership chain of the approved foreign investor without prior
   Commission approval provided that any new foreign-organized companies are
   under 100 percent common ownership and control with the approved foreign
   investor.
   Example (for rulings issued under § 1.990(a)(1)). Licensee receives a foreign
   ownership ruling under § 1.990(a)(1) that authorizes a foreign-organized
   company (“Foreign Company”) to hold a non-controlling 30 percent equity and
   voting interest in Licensee's controlling, U.S.-organized parent (“U.S.
   Parent A”). The remaining 70 percent equity and voting interests in U.S.
   Parent  A  are  held  by U.S.-organized entities which have no foreign
   ownership.  After  issuance  of  the  ruling,  Foreign Company forms a
   wholly-owned, foreign-organized subsidiary (“Foreign Subsidiary”) to hold
   all of Foreign Company's shares in U.S. Parent A. There are no other changes
   in the direct or indirect foreign ownership of U.S. Parent A. The insertion
   of Foreign Subsidiary into the vertical ownership chain between Foreign
   Company and U.S. Parent A would not require prior Commission approval.
   Example (for rulings issued under § 1.990(a)(2)). Licensee receives a foreign
   ownership ruling under § 1.990(a)(2) that authorizes a foreign-organized
   entity (“Foreign Company”) to hold approximately 24 percent of Licensee's
   equity and voting interests, through Foreign Company's non-controlling 48
   percent  equity  and  voting interest in a U.S.-organized entity, U.S.
   Corporation A, which holds a non-controlling 49 percent equity and voting
   interest directly in Licensee. A U.S. citizen holds the remaining 52 percent
   equity and voting interests in U.S. Corporation A, and the remaining 51
   percent  equity  and  voting  interests  in  Licensee  are held by its
   U.S.-organized parent, which has no foreign ownership. After issuance of the
   ruling, Foreign Company forms a wholly-owned, foreign-organized subsidiary
   (“Foreign Subsidiary”) to hold all of Foreign Company's shares in U.S.
   Corporation A. There are no other changes in the direct or indirect foreign
   ownership of U.S. Corporation A. The insertion of Foreign Subsidiary into
   the vertical ownership chain between Foreign Company and U.S. Corporation A
   would not require prior Commission approval.

   (2) Where a previously unapproved foreign-organized entity is inserted into
   the  vertical  ownership  chain  of  a  licensee,  or  its controlling
   U.S.-organized  parent,  without prior Commission approval pursuant to
   paragraph (d)(1) of this section, the licensee shall file a letter to the
   attention of the Chief, International Bureau, within 30 days after the
   insertion of the new, foreign-organized entity. The letter must include the
   name  of  the new, foreign-organized entity and a certification by the
   licensee that the entity complies with the 100 percent common ownership and
   control requirement in paragraph (d)(1) of this section. The letter must
   also reference the licensee's foreign ownership ruling(s) by IBFS File No.
   and FCC Record citation, if available. This letter notification need not be
   filed  if  the  ownership change is instead the subject of a pro forma
   application or pro forma notification already filed with the Commission
   pursuant to the relevant wireless radio service rules or satellite radio
   service rules applicable to the licensee.

   (e)  New petition for declaratory ruling required. A licensee that has
   received  a  foreign  ownership  ruling,  including  a  U.S.-organized
   successor-in-interest  to  such licensee formed as part of a pro forma
   reorganization, or any subsidiary or affiliate relying on such licensee's
   ruling pursuant to paragraph (b) of this section, shall file a new petition
   for declaratory ruling under § 1.990 to obtain Commission approval before its
   foreign ownership exceeds the routine terms and conditions of this section,
   and/or any specific terms or conditions of its ruling.

   (f)(1) Continuing compliance. If at any time the licensee, including any
   successor-in-interest  and any subsidiary or affiliate as described in
   paragraph (b) of this section, knows, or has reason to know, that it is no
   longer in compliance with its foreign ownership ruling or the Commission's
   rules relating to foreign ownership, it shall file a statement with the
   Commission explaining the circumstances within 30 days of the date it knew,
   or  had reason to know, that it was no longer in compliance therewith.
   Subsequent actions taken by or on behalf of the licensee to remedy its
   non-compliance  shall  not  relieve it of the obligation to notify the
   Commission of the circumstances (including duration) of non-compliance. Such
   licensee and any controlling companies, whether U.S.- or foreign-organized,
   shall  be  subject  to  enforcement  action by the Commission for such
   non-compliance, including an order requiring divestiture of the investor's
   direct and/or indirect interests in such entities.

   (2) Any individual or entity that, directly or indirectly, creates or uses a
   trust, proxy, power of attorney, or any other contract, arrangement, or
   device with the purpose or effect of divesting itself, or preventing the
   vesting, of an equity interest or voting interest in the licensee, or in a
   controlling U.S. parent company, as part of a plan or scheme to evade the
   application of the Commission's rules or policies under section 310(b) shall
   be subject to enforcement action by the Commission, including an order
   requiring divestiture of the investor's direct and/or indirect interests in
   such entities.

   [ 78 FR 41321 , July 10, 2013, as amended at  78 FR 44029 , July 23, 2013]

   return arrow Back to Top

Subpart G—Schedule of Statutory Charges and Procedures for Payment

   Source:  52 FR 5289 , Feb. 20, 1987, unless otherwise noted.

   return arrow Back to Top